Pound sees three wave rally from July low suggesting bearish reversal

GBP/USD (FOREX:GBPUSD) is moving higher, but rally from July low is still in three legs with wave C) now near completion as price is approaching upper trend line of a corrective channel as well as equality level compared to wave A). We can also count five waves up from 1.5100 wave B) low, so sooner or later reversal will follow, ideally from 1.5700.

GBP/USD 4h: Elliott Wave Analysis Chart

Zig-Zag – Corrective Elliott Wave Pattern

A three wave A-B-C move in Elliott Wave Theory is called a zig-zag that generally moves counter to the larger trend. It is one of the most common corrective Elliott Wave patterns.

Structure is 5-3-5

wave A must be a motive wave

wave B can only be a corrective pattern

wave B must be shorter than wave A by price distance

wave C must be a motive wave.

appears in wave two or four in an impulse, wave B in an A-B-C, wave X in a double or triple zig-zag, or wave Y in a triple threes

About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com. EW-Forecast.com provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: http://www.ew-forecast.com/